EXHIBIT 10.5
UNITED SHIPPING & TECHNOLOGY, INC.
SUBSCRIPTION AGREEMENT
AND
LETTER OF INVESTMENT INTENT
IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING.
SIGNIFICANT REPRESENTATIONS ARE CALLED FOR HEREIN.
United Shipping & Technology, Inc.
0000 00xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
THIS AGREEMENT, made effective the 30th day of December, 1999, between
United Shipping & Technology, Inc., a Utah corporation (the "Company"), and the
investors listed on Schedule I attached hereto, as may be amended pursuant to
Section 4 hereof, (each a "Purchaser" and collectively the "Purchasers"). Each
Purchaser agrees to purchase, and the Company agrees to sell and issue to each
Purchaser, the number of shares for the aggregate purchase price as set forth
opposite each Purchaser's name on Schedule I attached hereto at the Closing on
January 3, 2000 or at such other date as the Purchasers and the Company may
mutually agree in writing (the "Closing"). Each of the Purchaser's has also
completed the Purchaser Certification attached hereto as Attachment A.
1. Subject to the terms and conditions of this Agreement, the
Company agrees to sell to Purchasers, and Purchasers agree to
purchase from the Company at the Closing, an aggregate of ____
shares of the Company's $0.004 par value Common Stock (the
"Shares") at $5.025 per Share. Each Purchaser will purchase
the number of Shares as set forth opposite each Purchaser's
name on Schedule I attached hereto. Purchasers acknowledge
that this subscription is contingent upon acceptance in whole
or in part by the Company.
2. At the Closing, the Purchasers will deliver an aggregate
amount of $_______ by certified check or wire transfer to the
Company in payment of the full purchase price of the Shares
and the Warrant described below (the "Purchase Price"). Each
Purchaser will pay the Purchase Price as set forth opposite
each Purchaser's name on Schedule I attached hereto. The
Shares and such Warrant are collectively hereinafter sometimes
referred to as the "Securities". Checks shall be payable to
"United Shipping & Technology, Inc." Wire transfers to the
Company shall be made to:
Bank:
ABA No.:
Acct. Name:
Acct. No.:
3. At the Closing, the Company will deliver to Purchasers, Common
Stock Purchase Warrants (each a "Warrant" and collectively the
"Warrants") for the purchase of for an aggregate amount of
_______ shares of the Company's $0.004 par value Common Stock
(the "Warrant Shares"), which is an amount equal to 10% of the
Shares purchased by Purchasers, at an exercise price of
$12.50 per Warrant Share. Each Purchaser will be issued a
Warrant exercisable for the number of Warrant Shares as set
forth opposite each Purchaser's name on Schedule I attached
hereto. Such Warrants have a term of three years. Pursuant to
Section 14 of this Agreement, the Company is granting to
Purchasers certain Registration Rights in connection with the
Registrable Securities (as defined in Section 14(a) hereof).
Pursuant to Section 10 of each Warrant, the Warrants may be
redeemed by the Company under certain circumstances.
4. At the Closing, the Purchasers shall have the right to
designate another related entity as an additional Purchaser
and such Purchaser's allocation of the Shares and Warrants, as
well as the Purchase Price paid by such Purchaser shall be set
forth opposite such Purchaser's name on a revised Schedule I
attached hereto. Such additional Purchaser will be deemed to
have accepted the terms of this Agreement and the
representations made by Purchasers in this Agreement,
including the fact that such additional Purchaser qualifies as
an accredited investor as defined in Rule 501(a) of Regulation
D under the Securities Act of 1933, as amended (the "Act"). In
the event the Purchasers do not elect to designate another
related entity as a Purchaser, Schedule I attached hereto
shall not be revised.
5. Each Purchaser acknowledges and represents as follows:
(a) That such Purchaser has received and carefully
reviewed the Company's Annual Report on Form 10-KSB
for the year ended June 30, 1999, the Company's
Quarterly Report on Form 10-QSB for the quarter ended
October 2, 1999, the Company's Current Reports on
Form 8-K filed October 8, 1999 (and as amended
December 8, 1999) and November 12, 1999 and all other
relevant documents as filed with the Securities and
Exchange Commission;
(b) That such Purchaser believes it is able to bear the
economic risk of the investment in the Securities;
(c) That such Purchaser believes that it has knowledge
and experience in financial and business matters,
that it is capable of evaluating the merits and risks
of the prospective investment in the Securities and
that it is able to bear such risks;
(d) That such Purchaser understands an investment in the
Securities is highly speculative but believes that
the investment is suitable for it based upon its
investment objectives and financial needs, and has
adequate means for providing for its current
financial needs and personal contingencies and has no
need for liquidity of investment with respect to the
Securities;
(e) That such Purchaser has been given access to full and
complete information regarding the Company, including
the opportunity to meet with Company officers and
review all the documents as it may have requested in
writing;
(f) That such Purchaser recognizes that the Securities,
as an investment, involve a high degree of risk; and
(g) That such Purchaser realizes that (i) the purchase of
Securities is a long-term investment; (ii) the
purchasers of Securities must bear the economic risk
of investment for an indefinite period of time
because the Securities have not been registered under
the
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the Act, and, therefore, cannot be sold unless they
are subsequently registered under the Act or an
exemption from such registration is available; and
(iii) the transferability of the Securities is
restricted, and prior to registration of the
Securities (A) requires the written consent of the
Company, (B) requires conformity with the
restrictions contained in paragraphs 6 and 7 below,
and (C) will be further restricted by a legend placed
on the certificate(s) representing the Securities
stating that such Securities have not been registered
under the Act and referring to the restrictions on
transferability of the Securities, and by stop
transfer orders or notations on the Company's records
referring to the restrictions on transferability.
6. Each Purchaser has been advised that the Securities it is
purchasing hereunder have not been registered under the Act or
relevant state securities laws, the Securities it is
purchasing hereunder are being sold to Purchaser pursuant to
exemptions from the Act and such laws, and that the Company's
reliance upon such exemptions is predicated in part on such
Purchaser's representations to the Company as contained
herein. Each Purchaser represents and warrants that the
Securities it is purchasing hereunder are being purchased for
its own account and for investment and without the intention
of reselling or redistributing the same, that it has made no
agreement with others regarding any of such Securities and
that its financial condition is such that it is not likely
that it will be necessary to dispose of any of such Securities
in the foreseeable future. Each Purchaser is aware that, in
the view of the Securities and Exchange Commission and
applicable state bodies that administer state securities laws,
a purchase of the Securities it is purchasing hereunder with
an intent to resell by reason of any foreseeable specific
contingency or anticipated change in market value, or any
change in the condition of the Company or its business, or in
connection with a contemplated liquidation or settlement of
any loan obtained for the acquisition of the Securities it is
purchasing hereunder and for which the Securities it is
purchasing hereunder were pledged as security, would represent
an intent inconsistent with the representations set forth
above. Each Purchaser further represents and agrees that if,
contrary to its foregoing intentions, it should later desire
to dispose of or transfer any of such Securities in any
manner, it shall not do so without first obtaining (a) the
opinion of counsel reasonably acceptable to the Company that
such proposed disposition or transfer lawfully may be made
without the registration of such Securities for such purpose
pursuant to the Act, as then in effect, and applicable state
securities laws, or (b) such registrations (it being expressly
understood that except as set forth in this Agreement and the
Warrants, the Company shall not have any obligation to
register the Securities for such purpose).
Each Purchaser agrees that the Company may place the following
restrictive legend on the certificate(s) representing the
Securities it is purchasing hereunder, containing
substantially the following language:
The shares represented by this certificate were
issued without registration under the Securities Act
of 1933, as amended (the "Act"), and without
registration under state securities laws, in reliance
upon exemptions contained in the Act and such laws.
No transfer of these shares or any interest therein
may be made except pursuant to effective registration
statements under said laws or pursuant to Rule 144(k)
of the Act unless this corporation has received an
opinion of counsel satisfactory to it that such
transfer or disposition does not require registration
under said laws and, for any sales under Rule 144 of
the Act, such evidence as it shall request for
compliance with that rule.
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Each Purchaser agrees and consents that the Company may place
a stop transfer order on the certificate(s) representing the
Securities it is purchasing hereunder to assure such
Purchaser's compliance with this Agreement and the matters
referenced above.
The Company agrees to take all necessary actions, including
instructing its transfer agent, to remove the above legend
promptly upon compliance with the requirements set forth in
such legend.
Each of the parties hereto agrees to save and hold harmless,
defend and indemnify the other parties hereto and their
directors, officers and agents from any claims, liabilities,
damages, losses, expenses or penalties arising out of any
misrepresentation of information furnished by such party in
this Agreement.
7. Each Purchaser represents and warrants that such Purchaser is domiciled
or organized in the state listed in Schedule I to this Agreement and
that the Shares it is purchasing hereunder are being purchased solely
for the beneficial interest of such Purchaser and not as nominee, for,
or on behalf of, or for the beneficial interest of, or with the
intention to transfer to, any other person, trust or organization,
except as specifically set forth in Section 11 of this Agreement.
8. The obligation of the Purchasers to consummate the transactions described in
this Agreement is subject to satisfaction of the following conditions: (i) Xxxxx
X. Xxxxx, the President and Chief Executive Officer of the Company shall have
delivered to the Purchasers a certificate to the effect that each representation
and warranty of the Company in this Agreement is true and correct as of the
Closing, that as of the Closing there does not exist a Material Adverse Change
and that as of the Closing the Company is not in breach or violation of any of
the covenants contained in this Agreement, and (ii) pursuant to other agreements
with certain third parties unrelated to the Purchasers, an additional $4,500,000
has been invested in the Company on similar terms and conditions as this
Agreement.
9. [Intentionally Omitted.]
10. [Intentionally Omitted.]
11. Entities. If the Purchaser is not an individual but an entity, the
individual signing on behalf of such entity and the entity jointly and
severally agree and certify that:
A. The Purchaser was not organized for the specific purpose of
acquiring the Securities; and
B. This Agreement has been duly authorized by all necessary
action on the part of the Purchaser, has been duly executed by
an authorized officer or representative of the Purchaser, and
is a legal, valid and binding obligation of the Purchaser
enforceable in accordance with its terms.
12. The Company represents and warrants to the Purchaser as follows:
(a) The Company and its subsidiaries are corporations duly
organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have
the requisite corporate power to own their properties and to
carry on their business as now being conducted. Each of the
Company and its subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by
it makes such qualification necessary, except to the extent
that the failure to be so qualified or be
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in good standing would not have a Material Adverse Effect.
"Material Adverse Effect" or "Material Adverse Change" means
any material adverse effect on or material adverse change to,
respectively, (i) the business, properties, operations,
financial condition or results of operations of the Company
and its subsidiaries, taken as a whole, (ii) the ability of
the Company to perform its obligations hereunder or under the
agreements or instruments to be entered into in connection
herewith, or (iii) the Shares, the Warrant or the Warrant
Shares.
(b) (i) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this
Agreement and the Warrant, to issue and sell the Shares in
accordance with the terms hereof, and to issue the Warrant
Shares upon the exercise of the Warrant, in accordance with
the Warrant, (ii) the execution and delivery of this Agreement
and the Warrant by the Company and the consummation by it of
the transactions contemplated hereby and thereby, including,
without limitation, the issuance of the Shares and the Warrant
and the reservation for issuance and the issuance of the
Warrant Shares upon exercise of the Warrant have been duly
authorized by the Company's Board of Directors and no further
consent or authorization is required by the Company, its Board
of Directors or its shareholders, (iii) this Agreement and the
Warrant have been duly executed and delivered by the Company,
and (iv) this Agreement and the Warrant constitute the valid
and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and
remedies.
(c) The Shares, the Warrant and the Warrant Shares are duly
authorized, reserved and, upon issuance in accordance with the
terms hereof and the Warrant, as the case may be, shall be
validly issued, fully paid and non-assessable, free from all
taxes, liens and charges with respect to the issue thereof,
will give rise to rights of purchase in favor of Bayview
Capital Partners LP pursuant to certain agreements entered
into between Bayview Capital Partners LP and the Company,
which purchase rights the Company has received a written
waiver of from Bayview Capital Partners LP, and will not give
rise to any other preemptive rights or antidilution rights.
(d) The execution, delivery and performance of this Agreement and
the Warrant by the Company, and the consummation by the
Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Shares,
the Warrant and the Warrant Shares) will not (i) result in a
violation of the Articles of Incorporation or By-laws of the
Company or its subsidiaries or (ii) violate or conflict with,
or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation
of, any material agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, except
where any such violation or default would not have a Material
Adverse Effect, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and
regulations of the principal market or exchange on which the
Common Stock is traded or listed) applicable to the Company or
any of its subsidiaries or by which any property or asset of
the Company or any of its subsidiaries is bound or affected.
Neither the Company nor its subsidiaries is in violation of
any term of or in default under its Articles of Incorporation
or By-laws or their organizational charter or By-laws,
respectively, or in violation of any term of or in default
under any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order
or any statute, rule or regulation applicable to the Company
or its subsidiaries, except where any such violation or
5
default would not have a Material Adverse Effect. The business
of the Company and its subsidiaries is not being conducted in
violation of any law, ordinance or regulation of any
governmental entity which violation could have a Material
Adverse Effect. Except as specifically contemplated by this
Agreement and as required under the Act, the Company is not
required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or
governmental or regulatory or self-regulatory agency in order
for it to execute, deliver or perform any of its obligations
under or contemplated by this Agreement or the Warrant in
accordance with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the
Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the
date hereof. Upon consummation of the transactions set forth
in this Agreement, the Company will not be in violation of the
listing requirements of the NASDAQ Smallcap Market and the
Company does not reasonably anticipate that the Common Stock
will be delisted by the NASDAQ Smallcap Market in the
foreseeable future. The Company and its subsidiaries are
unaware of any facts or circumstances which might give rise to
any of the foregoing.
(e) Since January 1, 1998, the Company has filed all reports,
schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as
amended (the "1934 Act") (all of the foregoing filed prior to
the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred
to as the "SEC Documents"). The Company (i) has delivered or
made available to the undersigned or its representative true
and complete copies of the SEC Documents as each Buyer or its
representative has requested from the Company and (ii) agrees
to deliver or make available to Purchaser or its
representative true and complete copies of any additional SEC
Documents, upon request. As of their respective dates, the SEC
Documents, except for Company's Current Report on Form 8-K
filed June 9, 1998 which was amended on June 19, 1998, the
Company's Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1998 which was amended on February 2,
1999, the Company's Current Report on Form 8-K filed on
January 27, 1999 which was amended on March 29, 1999, the
Company's Current Report on Form 8-K filed on October 8, 1999
which was amended on December 8, 1999 and the Company's Annual
Report on Form 10-KSB for the year ended June 30, 1999 which
the Company expects to amend to augment the business
description and cautionary statements to properly capture the
acquisition of Corporate Express Delivery System, Inc.,
complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, or as
amended, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not
misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally
accepted accounting principles, consistently applied during
the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto, or (ii) in
the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and
the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). No other information
provided by or on behalf of the Company to the undersigned
6
which is not included in the SEC Documents contains any untrue
statement of a material fact. The Company has not provided and
will not provide to Purchaser any material non-public
information.
(f) Except as disclosed in SEC Documents filed prior to the date
hereof, since January 1, 1999, or as disclosed in Section
12(l) of this Agreement, there has been no material adverse
change and no material adverse development in the business,
properties, operations, financial condition or results of
operations of the Company and its subsidiaries taken as a
whole. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company or its
subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy
proceedings.
(g) Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has engaged in any form of
general solicitation or general advertising (within the
meaning of Regulation D under the Act) in connection with the
offer or sale of any of the Shares, the Warrant or the Warrant
Shares offered hereby.
(h) Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any
offers to buy any security, under circumstances that would
require registration of any of the Shares, the Warrant or the
Warrant Shares under the Act or cause the offering of any of
the Shares, the Warrant or the Warrant Shares to be integrated
with prior offerings by the Company for purposes of the Act or
any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of the
National Association of Securities Dealers Automated Quotation
system ("NASDAQ").
(i) The Company is currently eligible to register securities,
including the resale of the Shares and the Warrant Shares, on
a registration statement on Form S-3 under the Act.
(j) All information relating to or concerning the Company or any
of its subsidiaries set forth in this Agreement, the SEC
Documents or provided to the Purchaser in connection with the
transactions contemplated hereby is true and correct in all
material respects and the Company has not omitted to state any
material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which
they were made, not misleading. No event or circumstances has
occurred or information exists with respect to the Company or
any of its subsidiaries or its or their business, properties,
operations or financial conditions, which, under applicable
law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly
announced or disclosed (assuming for the purpose that the
Company's reports filed under the 1934 Act are being
incorporated into an effective registration statement filed by
the Company under the Act).
(k) The attached Schedule II is the current status of the
Company's year 2000 readiness. To the best of the Company's
knowledge, Schedule II is a true and correct statement of the
Company's year 2000 readiness as of the date of this
Agreement.
(l) Since December 17, 1999, the Company has not entered into any
agreement for, and the Company and is not presently
contemplating, the issuance of any shares of Common Stock or
any warrant or warrants for the purchase of shares of Common
Stock, or any security convertible into Common Stock, upon
terms more favorable than those set forth in this Agreement
and in the
7
Warrant. Since September 30, 1999 the Company has effected the
following transactions involving its Common Stock: an
aggregate of 225,000 stock options exercisable at a price of
$4.50 per share and an aggregate of 850,000 stock options
exercisable at a price of $4.95 per share were granted under
the Company's 1995 Stock Option Plan, and an aggregate of
146,083 shares of Common Stock were sold to seven accredited
individuals at a price of $4.50 per share along with warrants
for the purchase of an aggregate of 41,333 shares of Common
Stock at an exercise of $4.50 per share.
(m) The Company (both before and after giving effect to the
transactions contemplated by this Agreement) is solvent (i.e.
its assets have a fair market value in excess of the amount
required to pay its probable liabilities on its existing debts
as they become absolute and matured).
13. The Company covenants and agrees as follows:
(a) The Company agrees to file all reports, schedules, forms,
statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the 1934
Act. The financial statements of the Company will be prepared
in accordance with generally accepted accounting principles,
consistently applied except for changes required by GAAP, and
will fairly present in all material respects the consolidated
financial position of the Company and its consolidated
subsidiaries and results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
(b) The Company shall promptly secure the listing of the
Registrable Securities upon the Nasdaq Smallcap Market
(subject to official notice of issuance) and shall maintain,
so long as Purchaser owns any Warrant or Registrable Security,
the listing of all Registrable Securities from time to time
issuable under the terms of this Agreement and the Warrant on
each national securities exchange and automated quotation
system, if any, upon which shares of Common Stock are then
listed.
(c) Each of the Company and Purchaser shall pay its respective
costs and expenses incurred by such party in connection with
the negotiation, investigation, preparation, execution,
delivery and performance of this Agreement and the Warrant;
provided, that Purchaser may request, and in the event of such
request, the Company shall, reimburse Purchaser for
Purchaser's accountable attorneys' fees and expenses incurred
in connection with the preparation of this Agreement and the
Warrant up to an aggregate of $17,000.
(d) The Company will exercise best efforts to conduct its business
in compliance with all applicable laws, rules, ordinances and
regulations of the jurisdictions in which it is conducting
business, including, without limitation, all applicable local,
state and federal environmental laws and regulations the
failure to comply with which would have a Material Adverse
Effect.
(e) The Company will not conduct any future offering that will be
integrated with the issuance of the Shares, the Warrant or the
Warrant Shares which would result in a violation of the Act.
14. (a) The Company shall prepare, and, on or prior to thirty (30)
Business Days after the Closing, file with the SEC a
registration statement of the Company filed under the Act,
subject to any other provision of this Agreement (the
"Registration Statement") or Registration Statements (as is
necessary) on Form S-3 (or, if such form is unavailable for
such a registration, on such other form as is available for
such a registration, subject to the consent of the Purchaser
and the provisions
8
of Section 14(b) hereof, which consent will not be
unreasonably withheld), covering the resale of all of (i) the
Shares, (ii) the Warrant Shares issued or issuable upon
exercise of the Warrant and (iii) any shares of capital stock
issued or issuable with respect to the Shares, the Warrant
Shares or the Warrant as a result of any stock split, stock
dividend, recapitalization, exchange or similar event ((i),
(ii), and (iii) collectively, the "Registrable Securities"),
which Registration Statement(s) shall state that, in
accordance with Rule 416 promulgated under the Act, such
Registration Statement(s) also covers such indeterminate
number of additional shares of Common Stock as may become
issuable to prevent dilution resulting from stock splits,
stock dividends or similar transactions. The Registrable
Securities shall not include the Warrant. Such Registration
Statement shall initially register for resale the number of
Registrable Securities, subject to adjustment as provided in
Section 14(c) hereof. Such registered shares of Common Stock
shall be allocated among the Purchasers pro rata based on the
total number of Registrable Securities issued or issuable as
of each date that a Registration Statement, as amended,
relating to the resale of the Registrable Securities is
declared effective by the SEC. The Company shall use its best
efforts to have the Registration Statement declared effective
by the SEC within one hundred and thirty-five (135) days after
the Closing.
(b) [Intentionally Omitted.]
(c) The Company will use its best efforts to effect the
registration of the Registrable Securities for resale by
Purchasers in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall
have the following obligations:
(i) (A) The Company shall promptly prepare and file with
the SEC a Registration Statement with respect to the
Registrable Securities (on or prior to thirty (30)
Business Days after the Closing pursuant to Section
14(a)hereof and use its best efforts to cause such
Registration Statement(s) relating to Registrable
Securities to become effective as soon as possible
after such filing (but no later than one hundred and
thirty-five (135) days after the Closing, and keep
the Registration Statement(s) effective pursuant to
Rule 415 at all times until the earlier of (i) six
months after the date as of which Purchaser may sell
all of the Registrable Securities without restriction
pursuant to Rule 144(k) promulgated under the Act (or
successor thereto) or (ii) the date on which each
Purchaser shall have sold all of the Registrable
Securities (the "Registration Period"), which
Registration Statement(s) (including any amendments
or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a
material fact or omit to state a material fact
required to be stated therein, or necessary to make
the statements therein, in light of the circumstances
in which they were made, not misleading.
(B) (x) In the event that such Registration Statement
is not declared effective by the SEC within one
hundred and one hundred and thirty-five (135) days
after the Closing (the "Scheduled Effective Date"),
for each consecutive thirty (30) day period following
the Scheduled Effective Date, Purchaser shall, until
such time as the Registration Statement is declared
effective by the SEC (all such payments to be made in
cash and nonrefundable on the first day of each
thirty (30) day period), be entitled to an amount
from the Company equal to the product of (A) one half
of one percent, multiplied by (B) $5.025 multiplied
by (C) the aggregate number of such Purchaser's
Registrable Securities, as such price and aggregate
number of Registrable Securities may be adjusted for
any stock split, stock dividend, recapitalization or
similar event. The Scheduled
9
Effective Date shall be extended for any period
during which the filing of an amendment is precluded
by reason of the Company's response to a comment or
objection from Purchasers' counsel not timely made
pursuant to Section 14(c)(i)(B)(xi) hereof.
(y) Upon the occurrence of a Triggering
Event (as defined below), each Purchaser shall have
the right, at such Purchaser's option, to require the
Company to redeem all or a portion of such
Purchaser's Registrable Securities equal to the
greater of (x) the product of (A) the aggregate
number of such Purchaser's Registrable Securities,
multiplied by (B) the average of the last closing
sale price of such security on the principal
securities exchange or trading market where such
security is listed or traded, or, if applicable, in
the over-the-counter market on the electronic
bulletin board for such security on the ten
consecutive trading days immediately preceding the
applicable date; and (y) the product of (A) the
aggregate number of such Purchaser's Registrable
Securities, multiplied by (B) $5.025, multiplied by
(C) 130% (the "Triggering Event Redemption Price"),
as such price and aggregate number of Registrable
Securities may be adjusted for any stock split, stock
dividend, recapitalization or similar event.
A "Triggering Event" shall be deemed to have occurred at such
time as any of the following events:
(i) notice from the Company that Common Stock issued
or issuable cannot be sold under the Registration
Statement covering such Common Stock, for any period
of ten (10) consecutive trading days or any twenty
(20) non-consecutive trading days during any period
of one hundred and eighty (180) consecutive days that
is (A) after the date the Registration Statement has
been declared effective by the SEC, and (B) prior to
the time that the Registrable Securities may be sold
without limitation in accordance with Rule 144(k)
under the Act;
(ii) the failure of the Common Stock to be listed on
NASDAQ or any other national securities exchange for
a period of ten (10) consecutive trading days during
any period of twelve (12) months;
(iii) the failure to have the Registration Statement
declared effective by the SEC within two-hundred and
seventy (270) days after the Closing;
(iv) the failure by the Company to make any payment
in accordance with Section 14(c)(i)(B)(x) hereof
within seven (7) days after the date such payment is
due; or
(v) the Company's notice to any Purchaser, including
by way of public announcement, at any time, of its
intention not to comply with proper requests for
issuance of any Warrant Shares.
(ii) The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and
supplements to the Registration Statement(s) and the
prospectus(es) used in connection with the
Registration Statement(s), which prospectus(es) are
to be filed pursuant to Rule 424 promulgated under
the Act, as may be necessary to keep the Registration
Statement(s) effective at all times during the
Registration Period, and, during such period, comply
with the provisions of the Act with respect to the
disposition of all Registrable Securities of the
Company covered by the
10
Registration Statement(s) until such time as all of
such Registrable Securities shall have been disposed
of in accordance with the intended methods of
disposition by the seller or sellers thereof as set
forth in the Registration Statement(s). As soon as
practicable following the expiration of a Suspension
Period, as defined in Section 14(c)(v)(B) hereto, the
Company shall use its best efforts to cause any such
necessary amendment, supplement and/or new
Registration Statement to become effective as soon as
practicable following the filing thereof. In addition
any such amendment or new Registration Statement
shall for purposes of Section 14(c)(i) above be
deemed to be a "Registration Statement".
(iii) The Company shall furnish to each Purchaser whose
Registrable Securities are included in the
Registration Statement(s) and its legal counsel
without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of
the Registration Statement and any amendment thereto,
including financial statements and schedules, all
documents incorporated therein by reference and all
exhibits, the prospectus(es) included in such
Registration Statement(s) (including each preliminary
prospectus) and, with regards to the Registration
Statement referred to in Section 14(a) hereof, upon
request of a Purchaser, any correspondence by or on
behalf of the Company to the SEC or the staff of the
SEC and any correspondence from the SEC or the staff
of the SEC to the Company or its representatives,
(ii) upon the effectiveness of any Registration
Statement, ten (10) copies of the prospectus included
in such Registration Statement and all amendments and
supplements thereto (or such other number of copies
as such Purchaser may reasonably request) and (iii)
such other documents, including any preliminary
prospectus, as such Purchaser may reasonably request
in order to facilitate the disposition of the
Registrable Securities owned by such Purchaser.
(iv) The Company shall use reasonable efforts to (i)
register and qualify the Registrable Securities
covered by the Registration Statement(s) under such
other securities or "blue sky" laws of such
jurisdictions in the United States as any Purchaser
reasonably requests, except that the Company shall
not for any purpose be required to execute a general
consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction
wherein it is not so qualified, (ii) prepare and file
in those jurisdictions, such amendments (including
post-effective amendments) and supplements to such
registrations and qualifications as may be necessary
to maintain the effectiveness thereof during the
Registration Period, (iii) take such other actions as
may be necessary to maintain such registrations and
qualifications in effect at all times during the
Registration Period, and (iv) take all other actions
reasonably necessary or advisable to qualify the
Registrable Securities for sale in such
jurisdictions. The Company shall promptly notify each
Purchaser who holds Registrable Securities of the
receipt by the Company of any notification with
respect to the suspension of the registration or
qualification of any of the Registrable Securities
for sale under the securities or "blue sky" laws of
any jurisdiction in the United States or its receipt
of actual notice of the initiation or threatening of
any proceeding for such purpose.
(v) (A) The Company shall promptly notify Purchaser, (i)
when a prospectus or any prospectus supplement or
post-effective amendment has been filed and, with
respect to a Registration Statement or any
post-effective amendment, when the same has become
effective, (ii) of any request by the SEC or any
state securities authority for amendments and
supplements to a Registration Statement and
prospectus or for additional
11
information after the Registration Statement has
become effective, (iii) of the issuance by the SEC of
any stop order suspending the effectiveness of a
Registration Statement, (iv) of the issuance by any
state securities commission or other regulatory
authority of any order suspending the qualification
or exemption from qualification of any of the
Registrable Securities under state securities or
"blue sky" laws, and (v) of the happening of any
event which makes any statement made in a
Registration Statement or related prospectus untrue
or which requires the making of any changes in such
Registration Statement or prospectus so that they
will not contain any untrue statement of a material
fact or omit to state any material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which
they were made, not misleading. As soon as
practicable following expiration of the Suspension
Period (as defined below), the Company shall prepare
and file with the SEC and furnish a supplement or
amendment to such prospectus so that, as thereafter
deliverable to the purchasers of such Registrable
Securities, such prospectus will not contain any
untrue statement of a material fact or omit to state
a material fact necessary to make the statements
therein, in light of the circumstances under which
they were made, not misleading.
(B) Upon receipt of any notice (a "Suspension
Notice") by Purchaser from the Company of the
happening of any event of the kind described in
Section 14(c)(v)(A), Purchaser shall forthwith
discontinue disposition of the Registrable Securities
pursuant to the Registration Statement covering such
Registrable Securities until such Purchaser's receipt
of the copies of the supplemented or amended
Prospectus contemplated by Section 14(c)(v)(A) or
until Purchaser is advised in writing (the "Advice")
by the Company that the use of the prospectus may be
resumed, and has received copies of any additional or
supplemental filings which are incorporated by
reference in the prospectus, and, if so directed by
the Company, will, or will request any broker-dealer
acting as Purchaser's agent to, deliver to the
Company (at Company's expense) all copies, other than
permanent file copies then in Purchaser's or a
broker-dealer's possession, of the prospectus
covering such Registrable Securities current at the
time of receipt of such notice; provided, however,
that in no event shall the period from the date on
which Purchaser receives a Suspension Notice to the
date on which Purchaser receives either the Advice or
copies of the supplemented or amended prospectus
contemplated by Section 14(c)(v)(A) (the "Suspension
Period") exceed sixty (60) days.
(vi) The Company shall permit each Purchaser and a single
firm of counsel, initially Xxxxxxx Xxxx & Xxxxx LLP
or such other counsel as thereafter designated as
selling shareholders' counsel by the Purchasers who
hold a majority of the Registrable Securities being
sold, to review and comment upon the Registration
Statement(s) and all amendments and supplements
thereto at least seven (7) days prior to their filing
with the SEC, and not file any document in a form to
which such counsel reasonably objects. The Company
shall not submit a request for acceleration of the
effectiveness of a Registration Statement(s) or any
amendment or supplement thereto without the prior
approval of such counsel, which consent shall not be
unreasonably withheld.
(vii) The Company shall hold in confidence and not make any
disclosure of information concerning a Purchaser
provided to the Company by a Purchaser or on its
behalf unless (i) disclosure of such information is
necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is
necessary to avoid or correct a
12
misstatement or omission in any Registration
Statement, (iii) the release of such information is
ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental
body of competent jurisdiction, or (iv) such
information has been made generally available to the
public other than by disclosure in violation of this
or any other agreement. The Company agrees that it
shall, upon learning that disclosure of such
information concerning a Purchaser is sought in or by
a court or governmental body of competent
jurisdiction or through other means, give prompt
written notice to such Purchaser and allow such
Purchaser, at the Purchaser's expense, to undertake
appropriate action to prevent disclosure of, or to
obtain a protective order for, such information. It
shall be a condition of the Company's obligation to
register the Registrable Securities hereunder that
the Purchaser agrees to cooperate with the Company in
the preparation and filing of any such registration
statement, as to any proposed distribution.
(viii) The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by
the Purchasers of the Registrable Securities pursuant
to a Registration Statement.
(ix) The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable
Registration Statement to be registered with or
approved by such other governmental agencies or
authorities as may be necessary to consummate the
disposition of such Registrable Securities.
(x) The Company shall otherwise use its best efforts to
comply with all applicable rules and regulations of
the SEC in connection with any registration
hereunder.
(d) The Company hereby indemnifies each of the holders of any
Shares, the Warrant and of any Warrant Shares, and the
officers, partners, employees, agents, directors and each
other individual or entity, if any, who control any such
holder, within the meaning of Section 15 of the Act, against
all losses, claims, damages, liabilities or any other costs,
fees or expenses (including without limitation, reasonable
attorneys' fees) caused by (1) any untrue statement or alleged
untrue statement of a material fact contained in any
Registration Statement or prospectus prepared in connection
with any Registration Statement (and as amended or
supplemented if the Company shall have furnished any
amendments thereof or supplements thereto), any preliminary
prospectus or any state securities law filings; (2) any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein, in the case of a prospectus or preliminary
prospectus, in light of the circumstances under which the
statements therein were made, not misleading; or (3) any
violation or alleged violation by the Company of the Act, the
1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities
pursuant to a Registration Statement, except insofar as such
losses, claims, damages, or liabilities are caused by any
untrue statement or omission contained in information
furnished in writing to the Company by such holder expressly
for use therein, if such prospectus was timely made available
by the Company to such holder in accordance with this
Agreement. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall
make the maximum contribution to the payment and satisfaction
of each of the losses, claims, damages, liabilities, costs,
fees and expenses which is permissible under applicable law.
Each such holder by its acceptance hereof severally agrees
that it will indemnify and hold harmless the Company, each of
its officers who signs such Registration Statement, and
13
each person, if any, who controls the Company, within the
meaning of Section 15 of the Act, with respect to losses,
claims, damages, liabilities or any costs, fees or expenses
(including without limitation, reasonable attorneys' fees)
which are caused, and solely to the extent they are caused, by
any untrue statement or alleged untrue statement, omission or
alleged omission contained in information furnished in writing
to the Company by such holder expressly for use therein;
provided however, that such holder shall be liable under this
Section 14 for only that amount as does not exceed the net
proceeds to such holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.
15. Miscellaneous.
A. Manner in which title is to be held: as set forth on the
signature page of this Agreement.
B. Each of the parties hereto agrees that such party understands
the meaning and legal consequences of the agreements,
representations and warranties contained herein, and agrees
that such agreements, representations and warranties shall
survive and remain in full force and effect after the
execution hereof and payment for and delivery of the Shares
and the Warrant.
C. This Agreement shall be construed and interpreted in
accordance with Minnesota law without regard to conflict of
law provisions.
D. The Purchaser agrees to furnish to the Company, upon request,
such additional information as may be deemed necessary to
determine the Purchaser's suitability as an investor.
[NOTE: SIGNATURE PAGES TO FOLLOW]
SIGNATURE PAGE
Dated: ______________________, ______.
By: _________________________________
Name: _______________________________
Title: ______________________________
_____________________________________
Address
_____________________________________
City, State and Zip Code
_____________________________________
Mailing Address
_____________________________________
_____________________________________
City, State and Zip Code
_____________________________________
Tax Identification or Social Security Number
CERTIFICATE OF SIGNATORY
(TO BE COMPLETED ONLY IF SHARES ARE BEING SUBSCRIBED BYAN ENTITY.)
I, ________________________, am the ______________, of
____________________ (the "Entity").
I certify that I am empowered and duly authorized by the Entity to
execute and carry out the terms of the Subscription Agreement and Letter of
Investment Intent and to purchase and hold the Shares, and certify further that
the Subscription Agreement and Letter of Investment Intent has been duly and
validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this _____ day of __________,
_____.
Signature:____________________________
Title:________________________________
Name (Print):_________________________
ACCEPTANCE BY THE COMPANY
United Shipping & Technology, Inc. hereby accepts the foregoing
subscription to the extent of an aggregate of __________ shares of its Common
Stock and Warrants to purchase an aggregate of 89,552 shares of Common Stock,
and agrees to the provisions of this Agreement applicable to United Shipping &
Technology, Inc.
UNITED SHIPPING & TECHNOLOGY, INC.
By
-------------------------------------------
Xxxxx X. Xxxxx
President and Chief Executive Officer
ATTACHMENT A
PURCHASER CERTIFICATION
THE COMPLETION OF THIS PURCHASER CERTIFICATION IS REQUIRED IN CONNECTION WITH
THE EXEMPTIONS FROM THE ACT AND STATE LAWS BEING RELIED ON BY THE COMPANY WITH
RESPECT TO THE OFFER AND SALE OF THE SHARES AND THE WARRANT. ALL OF SUCH
INFORMATION WILL BE KEPT CONFIDENTIAL AND WILL BE REVIEWED ONLY BY THE COMPANY
AND ITS COUNSEL. Purchaser agrees to furnish any additional information which
the Company or its legal counsel deem necessary in order to verify the responses
set forth below.
1. Accredited Status. The Purchaser represents and warrants as follows
(CHECK ONE):
_______ A. The Purchaser is an individual
with a net worth, or a joint net
worth together with his or her
spouse, in excess of $1,000,000. (In
calculating net worth, you may
include equity in personal property
and real estate, including your
principal residence, cash,
short-term investments, stock and
securities. Equity in personal
property and real estate should be
based on the fair market value of
such property minus debt secured by
such property.)
_______ B. The Purchaser is an individual
with income in excess of $200,000 in
each of the prior two years and
reasonably expects an income in
excess of $200,000 in the current
year.
_______ C. The Purchaser is an individual
who, with his or her spouse, had
joint income in excess of $300,000
in each of the prior two years and
reasonably expects joint income in
excess of $300,000 in the current
year.
_______ D. The Purchaser is a director or
executive officer of United Shipping
& Technology, Inc.
_______ E. The Purchaser, if other than an
individual, is an entity all of
whose equity owners meet one of the
tests set forth in (A) through (D)
above.
_______ F. The Purchaser is an entity, and
is an "accredited investor" as
defined in Rule 501(a) of Regulation
D under the Act. This representation
is based on the following (check one
or more, as applicable):
______ 1. The Purchaser (or, in
the case of a trust, the
undersigned trustee) is a
bank or savings and loan
association as defined in
Sections 3(a)(2) and
3(a)(5)(A), respectively,
of the Act acting either in
its individual or fiduciary
capacity.
______ 2. The Purchaser is an
insurance company as
defined in section
2(13) of the Act.
______ 3. The Purchaser is an
investment company
registered under the
Investment Company Act of
1940 or a business
development company as
defined in Section 2(a)(48)
of that Act.
______ 4. The Purchaser is a Small
Business Investment Company
licensed by the United
States Small Business
Administration under
Section 301(c) or (d) of
the Small Business
Investment Act of 1958.
______ 5. The Purchaser is an
employee benefit plan
within the meaning of Title
I of the Employee
Retirement Income Security
Act of 1974 ("ERISA") and
either (check one or more,
as applicable):
___ a. the investment
decision is made
by a plan
fiduciary,
as defined in
Section 3(21) of
ERISA, which is
either a bank,
savings and loan
association,
insurance company,
or registered
investment
advisor; or
___ b. the employee
benefit plan has
total assets in
excess of
$5,000,000; or
___ c. the plan is a
self-directed plan
with investment
decisions made
solely by persons
who are
"accredited
investors" as
defined under the
Act.
______ 6. The Purchaser is a private
business development
company as
defined in Section 202(a)
(22) of the Investment
Advisers Act of 1940.
______ 7. The Purchaser has total
assets in excess of
$5,000,000, was not formed
for the specific purpose of
acquiring the Shares and is
one or more of the
following (check one or
more, as appropriate):
___ a. an organization
described in
Section 501(c)(3)
of the Internal
Revenue Code; or
___ b. a corporation; or
___ c. a Massachusetts or
similar business
trust; or
___ d. a partnership.
______ 8. The Purchaser is a trust
with total assets exceeding
$5,000,000 which was not
formed for the specific
purpose of acquiring the
Securities and whose
purchase is directed by a
person who has such
knowledge and experience in
financial
and business matters that
he or she is capable of
evaluating the merits and
risks of the investment in
the Securities. (IF ONLY
THIS RESPONSE IS CHECKED,
please contact the Company
to receive and complete an
information statement
before this subscription
can be considered).
2. NASD Affiliation. The Purchaser is affiliated or associated, directly
or indirectly, with a National Association of Securities Dealers, Inc.
("NASD") member firm or person.
Yes ________ No ________
If yes, list the affiliated member firm or person: ____________________
________________________________________________________________________________
________________________________________________________________________________
Your relationship to such member firm or person: ______________________
________________________________________________________________________________
________________________________________________________________________________
Dated: _______________________________
By:___________________________________
Name: ________________________________
Title: _______________________________
SCHEDULE II
YEAR 2000 COMPLIANCE AT CORPORATE EXPRESS DELIVERY SYSTEMS
We are pleased to announce that we at Corporate Express Delivery
Systems (formerly U.S. Delivery, United TransNet, Tricor, Midnite Express, and
Air Courier Dispatch) are in the final stages of our Year 2000 efforts for items
deemed at-risk for non-compliance. We are also well into the process of creating
contingency plans for operations in the unlikely occurrence of disruptions
relating to systems or supplier failures. We are confident at this time that
Corporate Express Delivery Systems will continue to meet our customers'
expectations with no significant disruptions due to the Year 2000 bug.
THE YEAR 2000 BUG
Year 2000 compliance includes the ability for systems to operate
correctly upon the beginning of the year 2000. It also includes the ability to
accept and process any date prior to January 1, 2000 and any date after December
31, 1999. This ability must exist before the year 2000 to handle future dates in
contracts, credit card expiration dates, etc., and must exist after the year
2000 to handle historical billing, inquiry, and reporting. Year 2000 compliance
also includes the ability to correctly handle leap year within the year of 2000.
BACKGROUND
Corporate Express Delivery Systems engaged the Year 2000 Compliance
practice of MCI/SHL SystemHouse (now a division of EDS) to assist in identifying
an inventory of items potentially at risk, and to perform an assessment of our
compliance. Our efforts then focused on upgrading, modifying or replacing these
items. The overall effort is sponsored within Corporate Express Delivery Systems
by our Chief Executive Officer and is under the direct supervision of our Chief
Information Officer.
COMPLIANCE STATUS
There are many areas potentially affected by this event that have been
evaluated and addressed. We have grouped these areas as follows:
VOICE All non-compliant voice communications components have been
COMMUNICATIONS upgraded or replaced.
DATA All non-compliant data communications components have been
COMMUNICATIONS upgraded or replaced.
SERVERS Several operational system servers and file and print servers
have been identified as non-compliant and are in the final
stages of being upgraded, replaced, or phased out of service.
OPERATIONAL Some operational systems have been identified as non-compliant
SYSTEMS and are in the final stages of being upgraded, replaced, or
phased out of service.
PC HARDWARE All non-compliant PCs have been upgraded or replaced.
PC SOFTWARE All non-compliant PC software has been upgraded, replaced, or
phased out of use.
INFRASTRUCTURE All non-compliant Infrastructure and Facilities components
AND FACILITIES have been upgraded, replaced or phased out of use.
YEAR 2000 SUPPORT
Corporate Express Delivery Systems plans to have a full support
capability at and around the time of the rollover into Year 2000. Our staff will
be on-site at corporate headquarters and all divisions to verify all major
utilities, hardware, software, and other systems and to identify and address any
areas of failure. We are prepared to implement our Contingency Plans immediately
upon any significant failure.
CONTINGENCY PLANNING
While not expecting significant problems, Corporate Express Delivery
Systems is developing contingency plans in the event of Year 2000 failures. Each
of our operational functions is being assessed for potential failures, including
systems failures, infrastructure failures, supplier problems, etc. Based upon
the risk assessment, we will take all or some of our contingency plans where
appropriate.
Contingency plans for all critical business processes will be complete
by September 30, 1999.
SUPPLIER COMPLIANCE PROGRAM
CEDS has confirmed Year 2000 readiness with all corporate suppliers. We
continue to monitor suppliers that provide our most critical products and
services.
SUMMARY
We are aware of and understand the seriousness of the Year 2000 issues.
We believe we have a planned, disciplined approach to mitigate those issues.
Therefore we believe that the Year 2000 problem does not pose a material risk to
our business. We are confident that Corporate Express Delivery Systems will not
experience any significant disruption to our business as a result of this event.
